HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 234 / 2016 Commissioner of Income Tax ( Exemptions), 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur Appellant Versus M/s Shree Shyam Mandir Committee, Khatushyam Ji, Distt. Sikar (Raj.) Respondent For Appellant(s) : Mr. Daksh Pareek for Mr. Sameer Jain For Respondent(s) : Mr. Mahendra Gargieya HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 23/10/2017 1. By way of this appeal, appellant has challenged judgment and order of Tribunal whereby Tribunal has allowed appeal of assessee. 2. This Court while admitting appeal on 07.12.2016 framed following substantial question of law: 1. Whether on facts and circumstances of case Hon ble ITAT was justified in applying Proviso of Section 12A(2), inserted w.e.f. 01.10.2014, with retrospective effect in spite of facts that proviso has no indication of being applied for earlier years retrospectively. 3. In case of assessee itself this court has already taken view in D.B. Income Tax Appeal No.224/2010 dated 02.08.2017, wherein it has been observed as under:- (2 of 28) [ITA-234/2016] 1. Since in all these appeals, common questions of law and facts are involved, they are decided by this common judgment. 2. By way of these appeals, appellants have challenged judgment and order passed by tribunal whereby tribunal has allowed appeals of assessee, reversing view taken by Commissioner of Income Tax Jaipur-III, Jaipur vide judgment and order dated 30.09.2009 whereby registration under Section 12A was rejected. 3. This court while admitting appeal has framed following substantial questions of law:- D.B. Income Tax Appeal No.224/2010 admitted on 13.12.2010:- (i) Whether granting registration to private trust u/s. 12A was legal and proper especially when Sections 2(15),11,12 & Section 13 specifically restricts use and application of voluntarily contribution/income for benefit of private person u/s.13(3)? (ii) Whether applications of Rajasthan Public Trust Act, 1959 can be applied to private trust especially when they are covered by Indian Trust Act, 1882? D.B. Income Tax Appeal No.273/2016 admitted on 17.01.2017:- "(i) Whether on facts and circumstances of case and in law, Hon'ble ITAT was justified in allowing Gujara Bhatta as application of income of trust by following earlier order in spite of fact that is as not fixed by State Government as per Section 65 of Rajasthan Public Trust Act, 1959 r.w. Rule 38 of Rajasthan Public Trust Rules, 1962?" (iii) Whether provisions of Rajasthan Public Trust Act are applicable to Trust when Trust is specifically governed by Indian Trust Act 1882?" D.B. Income Tax Appeal No.274/2016 admitted on 7.12.2016:- Whether on facts and circumstances of case and in law, Hon ble ITAT was justified in allowing Gujara Bhatta as application of income of trust by (3 of 28) [ITA-234/2016] following earlier order in spite of fact that it was not fixed by State Government as per Section 65 of Rajasthan Public Trust Act, 1959 r.w. rule 38 of Rajasthan Public Trust Rules, 1962. 4. Counsel for appellant has taken us to definition of 2(31)(vii), Section 2(24)(iia), 2(15) Section 12A, Section 12AA, Section 13(1)(a), and Section 13(3) of Income Tax Act. He has also taken us to Section 17A of Rajasthan Public Trust Act which reads as under:- 2. Utility of Act.-Shri K.N. Shah in Bombay Public Trust Act 1950, eighty Edition, p.3 has observed- There are instances of how Mahants, Pujaris, Bhatjis and Acharyas who have lived on temple and its income for years and flourished fat o;n earnings of Holy shrines and attempting to devour and appropriate deity and donations to themselves. Through they may have for generations held out to and invited innumerable devotees for Darshan and hundreds of devotees may have openly come for Darshan, and worshipped idol for years, and though donations, offerings and emoluments may have been begged, asked for, offered and received uninterruptedly, when it comes to registration of Temple as Public Trust and accounting for its income, they would not stop of claiming exclusive rights of ownership not only over income but over idol, deity of temple too. They, preservers of deity and spiritual heads, supposed saviors of souls of siners & sanctity of holy shrink would go to any length to perjure themselves, if they could not establish their ownership over endowment and its property, and derive material benefit of getting its income. Such instances are not few. richer endowment, greater temptation to swallow same. To such impious Pujaris, Managers and Mahants, nothing matters, consideration neither of this world nor next, if they could only serve their selfish end. Such instances, justify passing of and utility of this Act. (4 of 28) [ITA-234/2016] These days Trusts and Temples have assumed great importance. This is because State has thought it advisable to introduce legislation for governance for safeguarding interest of beneficiaries and for avoiding cases of magnificence and to check mis-appropriation and criminal breach of trust. As expressed by late Hon ble Justice Chagle C.J. of Bombay, in his judgment that whole attempt and whole object is to see that properties settled on public and charitable trusts are properly managed and are properly administered, that trustees keep proper accounts that trustees render those accounts, answer questions put to them arising out of those accounts and every single provision contained in Act is incorporated from that point of view. Ratilal Pannachand Gandhi Vs. State of Bombay, 55 Bom. LR 86= AIT 1953 Bom. 242= ILR 1953 Bom. 1187. utility of this Act is being realised by members of public and Bombay High Court had made survey of this Act in case reported as C.C. vs. Municipality of Taloda, 65 Bom.LR 27. Gujarat High Court also had made survey of this Act in cases reported as Kuberbhai vs. Purshottamdas, (1961) 2 GLR 564; Lallubhai G. Parikh vs. Acharya Shri Vrijbhushanlal Balkrishanlalji, (1967) 8 GLR 42. As law stands, trustees of charity, however small, has to perform onerous duties involving certain amount of expenses, Gross abuses of public trusts and trust funds by unscrupulous trustees, no doubt demand statutory control and regulation and law had its inspiration and jurisdiction. whole object of Legislature, in passing Act highly laudable, e.g. to see that public trusts were properly and efficiently administered." He also pointed out Section 2(xi) of Public Trust Act and contended that in view of definition envisaged under Act, every public trust registered under Rajasthan Public Trust Act is deemed to be society and benefits which are granted under Section 12A are not available to be granted. (5 of 28) [ITA-234/2016] 5. However, he has taken us to order of Commissioner of Income Tax which has declined registration and contended that view taken by tribunal is required to be reversed, more particularly in view of provisions of Section 13(1)(a) and 13(3) of Income Tax Act. 6. He has relied upon decision of Madras High Court in case of Commissioner of Income Tax-Madras Vs. M Jama Mohammad Sahib reported in (1941)9ITR375 (Mad) wherein courts has observed as under:- In Umar Bakhsh v. Commissioner of Income- tax, Punjab (1931) I.L.R. 12 Lah. 725 : 5 I.T.C. 402 (F.B.), Lahore High Court expressly held that expression "religious or charitable purposes" in S.4 (3) (i) has to be construed with reference to English law and not to personal law of assessee and this opinion was accepted by Patna High Court in Humayun Rasa Chowdhury v. Commissioner of Income-tax, Bihar and Orissa 10 I.T.C. 7. learned Advocate for assessee (muthavalli) has suggested that decision of Judicial Committee in Trustees of Tribune Press, Lahore v. Commissioner of Income-tax, Punjab, Lahore (1939) 2 M.L.J. 444 : L.R. 66 I.A. 241 : I.L.R. (1939) Lah. 475 (P.C.), has negatived this opinion, but we cannot read judgment in that sense. passage which has just been quoted from judgment of Privy Council speaks of test of general public utility. As this is test so far as Indian Income-tax Act is concerned it is not necessary to consider whether trust here would be deemed to be charitable in England. Even assuming that Court may have regard to Muslim ideas in deciding whether Muslim trust fulfils test of general public utility, it cannot be said that that part of trust deed which relates to setting aside of income for descendants of donor constitutes trust for general public utility. beneficiaries are to be members of donor's own family. utility is not of public, but clearly of private nature. For these reasons we would answer first question in negative. second question calls for no discussion. position is that muthavalli has in his (6 of 28) [ITA-234/2016] hands income belonging to private trust. Income of private trust is not exempt from taxation and muthavalli is assessable in respect of it, because he holds it. It follows that answer to second question is in affirmative. 7. He therefore contended that view taken by tribunal is required to be reversed. 8. Mr. Jain has also taken us to observations made by tribunal in para 6 which reads as under:- 6. We have heard and considered arguments advanced by parties in view of orders of ld.CIT, material available on record and decision relied upon. ld.CIT has raised two issues. Firstly as to whether assessee is private trust since it is run by representative of three families and secondly as to whether it is for their benefit since they are paid 15% of total receipt as also marriage and other help. We note that there is no specific definition of public or private trust in Income Tax Act, 1961. Various decided cases provide guidelines in this regard, according to which trust would be public trust where benefit enure to public at large. control and management of trust property left in hands of body of individual belonging to settlers family is of no consequence in determining whether trust is public trust or not. In case of Ganeshram Rami Devi Charitable Trust Vs. CIT 71 ITR 696 (Cal.), Hon ble High Court considered question whether provision that management is left to private individuals and not tot he public would, in any way, affect nature of trust for purpose of Income-tax Act. It is observed that phrase charitable purpose in Income-tax Act includes relief of poor, education, medical relief and advancement of any other object of general public utility . It is further provided that nothing contained in clause (i) or clause (ii) shall operate to exempt from provisions of Act that part of income from property held under trust or other legal obligation for private religious purposes which does not ensure for (7 of 28) [ITA-234/2016] benefit of public. This definition does not deal with matter of control and management of fund. There is no reference of same in it. implication, therefor, is that matter of management of fund is not essential matter for purpose of defining charitable purposes so far as Income-tax Act is concerned; it may be essential for other purposes as, for example, for purpose of section 92 of Code of Civil Procedure. What is eseential for Income-tax Act is whether it enures to benefit to public or not, whoever may control fund. Therefore, even if funds are controlled by body of persons which is not public body in any sense, but if fund enures to benefit of public , it wold still be charitable purpose within meaning of Income-tax Act. Therefore, it did not agree with contention that because control of fund is not left to public, it must be concluded that it is not public charitable trust. court held that it is not condition essential for determining charitable trust for purposed of Indian Income-tax Act. All that is required is that fund is spent or accumulated for religious and charitable purposes. Jodhpur Bench of ITAT in case of Smt. Mansukhi Devi Bihani Jan Hitkari Trust Vs. CIT 277 ITR 140 (AT) (Jodh.) after discussing facts of case observed that in case before them, it is not in dispute that application for registration has been made in prescribed form i.e. Form No. 10A. It is also not case of Department that property held by trust and income therefrom had not been utilized for purposes of charity/public utility. only reason for not granting registration was that there is clause in trust deed that in event of vacancy arising in board of trustees for whatever reasons, remaining trustees shall co-opt another major male or female person out of family members of that person to fill up vacancy . Only on that basis, learned Commissioner of Income-tax considered that trust was family (8 of 28) [ITA-234/2016] affair/settlement. However, he has not brought any material on record that by co- opting person from family of previous trustee, how object of trust has been changed or by co-opting another family member of trustee on account of vacancy as to how income was not utilized for public charity. Thereafter, ITAT after considering object of trust, provisions of section 12A and Rule 17A concluded that Commissioner of Income-tax was not justified in refusing registration to assessee merely on basis that in case of vacancy in board of trustees, remaining trustees are to co-opt another person from very family of outgoing trustee as as such trust appears more in nature of family affair/settlement than charitable trust. Accordingly it directed to grant registration under section 12A of Income-tax Act, 1961. These cases clearly lay down proposition that control on management of fund is no criteria for determining whether trust is public or private trust. What is required to be seen is that in enures to benefit of public or not who ever may control fund. It is not in doubt that activities carried out by assessee enures to benefit of public and it is for this reason that it is registered as public trust under Rajasthan Public Trust Act, 1959. object of trust are also for religious and charitable purpose and is not restricted to any particular cast, colour, or creed. We, therefore, hold that assessee is public trust and not private trust. 9. However, Mr. Gagria, counsel for respondent has taken us to paragraph 10 of order to tribunal which reads as under:- 10. We also note that at time of grant of registration u/s 12AA ld. CIT is to satisfy himself about genuineness of activity of trust and about object of trust. At this stage he is not required to ponder into provisions of section 13. applicability of section 13 is to be looked by AO at time of assessment. (9 of 28) [ITA-234/2016] ld.CIT has not brought on record any positive evidence that activities of trust are not genuine or funds of trust are not applied for its object. He only assumed that since trusties are getting benefit by way of gujara bhatta and other facilities perpetually, activities of trust are not genuine. This can not be reason for refusing registration u/s 12AA. In case of Modern Defence Shishkan Sansthan Vs. CIT 108 TTJ 732 (Jodh.) it was held that at stage of consideration of issue of registration under section 12AA, it is not sine qua non to examine aspect of application of income. When Commissioner has not doubted aims and objects of society, he cannot throw away application of registration on this pretext. In case of Dream Land Educational Trust Vs. CIT 109 TTJ (Asr.) 850, it was held that for grant of registration under section 12AA, only relevant consideration is satisfaction of Commissioner regarding objects of trust and genuineness of its activities; in absence of any dissatisfaction of Commissioner with regard to either objects or genuineness of activities of trust, if registration is refused to trust, it would be violation of provisions of section 12AA. In case of Asstt. DIT Vs. Rajasthani Shiksha Samiti 23 SOT 124 (Hyd) it was held that when registration to trust is granted by Commissioner u/s 12A, then it is for AO to examine every year whether income has been applied by assessee for charitable purpose or not and if income is not so apply, it wold be duty of AO to tax such income but he cannot further held that trust is not established for charitable purpose. Hon ble Karnataka High Court in case of Sanjeevamma Hanumanthe Gowda Charitable Trust vs. DIT 285 ITR 327, (Kar) has held that for purpose of registration u/s 12A what authorities have to satisfy is genuineness of activities of trust or institution and how income derived from trust property is applied to charitable or religious purpose and not nature of activity by which income is derived from trust property is applied for charitable and religious purpose as (10 of 28) [ITA-234/2016] discussed above. Hence, for detailed reasons stated supra, we direct ld. CIT to grant registration u/s 12A to assesse. 10. He has also relied upon decision of this court in case of Commissioner of Income Tax Vs. Vijay Vargiya Vani Charitable Trust reported in (2014) 90 CCH 0209 RajHC wherein it has been observed as under:- In our view, object of Section 12AA is to examine genuineness of objects of trust but not income of trust for charitable or religious purpose.the Commissioner cannot sit in chair of Assessing Officer to look into amount spent on charitable activities at time of creation of Trust. stage for reviewing application of income has not arrived when such trust or institution files application for registration of trust/society. 11. He has also relied upon judgment rendered by Punjab and Haryana High Court in case of Commissioner of Income Tax Vs. Surya Educational & Charitable Trust reported in (2013) 355 ITR (P&H) and judgment rendered by Allahabad High Court in case of Commissioner of Income Tax Vs. Red Rose School reported in (2007) 212 CTR 394 (All HC). He has also relied upon para 5.2 of Circular No.14/2015 (F.No.197/38/2015-ITA.I) dated 17.08.2005 which reads as under:- There is no provision under Act which calls for denial of exemption merely on account of appointment or removal of trustees. Although answer to sucha situation would normally depend on factual implication of such arrangement, samej should generally not be ground for denying exemption unless nature of activities of trust or institution get changed or modified or no longer remain to exist solely for educational purpose and not for purposes of profit . Hence denial of exemption would not be justifiable only on ground of induction of new trustees or removal of existing ones. 12. We have heard counsel for parties. (11 of 28) [ITA-234/2016] 13. Before proceeding with matter, it will not be out of place to mention here that in all questions of law, question which consideration before us is whether taking into account, observations made in paragraph 10, view taken by tribunal is just and proper. At time of registration, authority is required to look whether it is registered under state Act or under any other Act. There is no distinction between private trust and public trust. contention which has been raised by counsel for appellant regarding expenses, diversion or control by private people will come only when assessment has taken place. For purpose of trust registered and income used is for charitable purpose or not and whether income from public trust if it is going for any private use will negative very object of Trust Act which is main intention of legislation, is not to be considered at this stage. 14. In that view of matter, we see no reason for interfere with finding of tribunal. Both issues are answered in favour of assessee. 15. appeals stand dismissed. 4. Counsel for respondent has relied upon following decisions: 1. Sree Sree Ramkrishna Samity vs. Deputy Commissioner of Income Tax, (2016) 156 ITD 0646, wherein it observed as under:- 6.3. It is relevant at this juncture to get into amendment brought in section 12A by Finance Act 2014 with effect from 1.10.2014 by way of insertion of first proviso to section 12A(2) of Act which is reproduced below for sake of convenience :- Section 12 (2) Where application has been made on or after 1st day of June 2007, provisions of section 11 and 12 shall apply in relation to income of such trust or institution from assessment year immediately following financial year in which such application is made: Provided that where registration has been granted to trust or institution under section 12AA, then, provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessement year preceding aforesaid assessment year, for which assessment proceedings are (12 of 28) [ITA-234/2016] pending before Assessing Officer as on date of such registration and objects and activities of such trust or institution remain same for such preceding assessment year: Provided further that no action under section 147 shall be taken by Assessing Officer in case of such trust or institution for any assessment year preceding aforesaid assessment year only for non-registration of such trust or institution for said assessment year: Provided also that provisions contained in first and second proviso shall not apply in case of any trust or institution which was refused registration or registration granted to it was cancelled at any time under section 12AA. 6.4. Admittedly, reassessment proceedings were pending before Learned AO for Asst Years 2003-04 to 2008-09 as on date of granting registration u/s 12AA of Act on 29.10.2010 with effect from 1.4.2010 as reassessment proceedings got commenced pursuant to issuance of notice u/s 148 on 30.3.2010 as stated supra. Admittedly, objects and activities of trust had remained same in preceding assessment years also i.e Asst Years 2003-04 to 2008-09. Though this first proviso to section 12A(2) talks about pendency of assessment proceedings, it is relevant to get into definition of term assessment in section 2(8) of Act, wherein it is defined as assessment includes reassessment . Hence even reassessment proceedings that were pending would also come under ambit of first proviso to section 12A(2) of Act. 6.5. second proviso to section 12A(2) also provides that no action u/s 147 of Act shall be taken merely for non- registration of trust or institution. Reading this proviso with first proviso to section 12A(2) and applying Rule of Harmonious Construction, it could safely be concluded that legislature in its wisdom had only brought this proviso to prevent genuine hardship that could be caused on assessee due to non-registration u/s 12AA of Act and accordingly in our opinion, provisos to section 12A(2) of Act is to be construed as retrospective in operation. 6.6. third proviso to section 12A(2) of Act also provides that first and second proviso shall not be applicable if trust or institution had been refused registration earlier or registration granted earlier is cancelled by Commissioner u/s 12AA of Act. This also goes to prove that first and second proviso shall be made applicable for trusts for earlier assessment years also who had not applied for registration u/s 12AA of Act at all. 6.7. We hold that registration of trust under section 12A of Act once done is fait accompli and AO cannot thereafter make further probe into objects of trust. Reliance in this regard is placed on decision of Hon ble Apex Court rendered in case of ACIT vs Surat City Gymkhana reported in (2008) 300 ITR 214 (SC). Drawing analogy from this judgement, logical inference could be that as long as objects were charitable in nature in (13 of 28) [ITA-234/2016] earlier years and in year in which registration u/s 12AA was granted, existence of trust for charitable purposes in earlier years cannot be doubted with. Even otherwise, no adverse findings were given by revenue with regard to existence of assessee society for charitable purposes in assessment years under appeal. 6.8. It will be relevant to get into Explanatory Notes to Provisions of Finance (No. 2), 2014 as given in CBDT Circular No. 01 / 2015 dated 21.1.2015 in reference F.No. 142/13 /2014-TPL which is reproduced hereinbelow for sake of convenience :- Para 8 Applicability of registration granted to trust or institution to earlier years Para 8.2 Non-application of registration for period prior to year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, power of condonation of delay in seeking registration was not available. This clearly goes to prove that first proviso to section 12A(2) was brought in statute only as retrospective effect with view not to affect genuine charitable trusts and societies carrying on genuine charitable objects in earlier years and substantive conditions stipulated in section 11 to 13 have been duly fulfilled by said trust. benefit of retrospective application alone could be intention of legislature and this point is further strengthened by Explanatory Notes to Finance (No. 2) Act, 2014 issued by Central Board of Direct Taxes vide its Circular No. 01/2015 dated 21.1.2015. Apparently statute provides that registration once granted in subsequent year, benefit of same has to be applied in earlier assessment years for which assessment proceedings are pending before Learned AO, unless registration granted earlier is cancelled or refused for specific reasons. statute also goes on to provide that no action u/s 147 could be taken by AO merely for non-registration of trust for earlier years. 6.9. With regard to arguments of Learned DR that donations received by assessee falls under definition of income u/s 2(24)(iia) of Act, we would like to state that income definition is inclusive definition. inclusive definition extends specific meaning given in stated items by general meaning as commonly understood by said expression which is defined in statute. word income as is commonly understood does not include any donation specifically meant for utilization for acquiring, constructing capital asset, as is case here. Further section 2(24) had undergone amendment by way of insertion of clause (iia) by Finance Act, 1972 with effect from 1.4.1973. In this connection, it will be relevant to get into Memorandum explaining provisions in Finance Act 1972 reported in 83 (14 of 28) [ITA-234/2016] ITR (St.) 173, wherein Paragraphs 24 and 25 clearly define scope of amendment wherein in paragraph 25(i) , concluding sentence is as under:- contributions received with specific direction that they will form part of corpus of trust or distribution will, however, not be regarded as income. Thus relevant clause defining income in section 2(24)(iia) as introduced with effect from 1.4.1973 was clearly not intended to cover contributions / donations received with specific direction that they will form part of corpus of trust for utilization in acquisition / construction of capital asset. Thus what is not income as per definition of word income in Act cannot be brought to tax under any other provision of Act. We find that order of Learned CITA failed to distinguish between case where receipt is not income at stage of its receipt and case where it is not so but is claimed to be exempt because of any exemption provision granting exemption from taxation to receipts which are liable to taxation but for provision granting exemption. 6.10. We hold that it is established position in law that proviso which is inserted to remedy unintended consequences and to make provision workable, proviso which supplies obvious omission in section and is required to be read into section to give section reasonable interpretation, requires to be treated as retrospective in operation, so that reasonable interpretation can be given to section as whole and accordingly said insertion of first proviso to section 12A(2) of Act with effect from 1.10.20 14 should be read as retrospective in operation with effect from date when condition of eligibility for exemption under section 11 & 12 as mentioned in section 12A provided for registration u/s 12AA as pre-condition for applicability of section 12A. Reliance in this regard is placed on following decisions :- Allied Motors P ltd vs CIT reported in (1997) 224 ITR 677 (SC) Judgement by three judges of Supreme Court departmental understanding also appears to be that section 43B, proviso and Explanation 2 have to be read together as expressing true intention of section 43B. Explanation 2 has been expressly made retrospective. first proviso, however, cannot be isolated from Explanation 2 and main body of section 43B. Without first proviso, Explanation 2 would not obviate hardship or unintended consequences of section 43B. proviso supplies obvious omission. But for this proviso ambit of section 43B become unduly wide bringing within its scope those payments, which were not intended to be prohibited from category of permissible deductions. In case of Goodyear India Ltd vs State of Haryana (1991) 188 ITR 402 , this court said that rule of reasonable construction must be applied while construing statute. Literal construction should be avoided if it defeats manifest object and purpose of Act. (15 of 28) [ITA-234/2016] As observed by G.P.Singh in his Principles of Statutory Interpretation, 4th Edn., Page 291, It is well settled that if statute is curative or merely declaratory of previous law, retrospective operation is generally intended . In fact amendment would not serve its object in such situation, unless it is construed as retrospective. view, therefore, taken by Delhi High Court cannot be sustained. CIT vs Virgin Creations in ITAT No. 302 of 2011 in GA 3200 / 2011 dated 23.11.2011, Hon ble Calcutta High Court in context of retrospective applicability of amendment to section 40(a)(ia) of Act held as below:- supreme court in case of Allied Motors P ltd and also in case of Alom Extrusions Ltd has already decided that aforesaid provision has retrospective application. Again, in case reported in 82 ITR 570, Supreme Court held that provision, which has inserted remedy to make provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to section as well . CIT vs Vatika Township P Ltd reported in (2014) 367 ITR 466 (SC) Five Judges decision of Supreme Court We would also like to point out, for sake of completeness, that where benefit is conferred by legislation, rule against retrospective construction is different. If legislation confers benefit on some persons but without inflicting corresponding detriment on some other person or on public generally, and where to confer such benefit appears to have been legislators object, then presumption would be that such legislation, giving it purposive construction, would warrant it to be given retrospective effect. This exactly is justification to treat procedural provisions as retrospective. In Government of India vs Indian Tobacco Association reported in (2005) 7 SCC 396, doctrine of fairness was held to be relevant factor to construe statute conferring benefit, in context of it to be given retrospective operation. same doctrine of fairness, to hold that statute was retrospective in nature, was applied in case of Vijay vs State of Maharashtra reported in (2006) 6 SCC 289. It was held that where law is enacted for benefit of community as whole, even in absence of provision statute may be held to be retrospective in nature. However, we are confronted with any such situation here . In such cases, retrospectivity is attached to benefit persons in contradistinction to provision imposing some burden or liability where presumption attaches towards prospectivity. In instant case, proviso added to section 113 of Act is not beneficial to assessee. On contrary, it is provision which is onerous to assessee. Therefore, in case like this, we have to proceed with normal rule of presumption against retrospective operation. Thus, rule against retrospective operation is fundamental rule of law that no statute shall be construed to have retrospective operation unless such construction appears very clearly in (16 of 28) [ITA-234/2016] terms of Act or arises by necessary and distinct implication. Dogmatically framed, rule is no more than presumption, and thus could be displaced by out weighing factors. CIT vs J.H.Gotla reported in (1985) 156 ITR 323 (SC) If purpose of particular provision is easily discernible from whole of scheme of Act which in this case, is to counteract effect of transfer of assets so far as computation of income of assessee is concerned, then bearing that purpose in mind, we should find out intention from language used by legislature and if strict literal construction leads to absurd result, i.e., result not intended to be subserved by object of legislation found in manner indicated before, then another construction is possible apart from strict literal construction then that construction should be preferred to strict literal construction. 6.11. We also hold that though equity and taxation are often strangers , attempts should be made that these do not remain always so and if construction results in equity rather than in injustice, then such construction should be preferred to literal construction. It is only elementary that statutory provision is to be interpreted ut res magis valeat quam pereat, i.e to make it workable rather than redundant. Applying this legal maxim, it would be just and fair to hold that amendment in section 12A is brought in statute to confer benefit of exemption u/s 11 of Act on genuine trusts which had not changed its objectives and had carried on same charitable objects in past as well as in current year based on which registration u/s 12AA is granted by DIT(Exemptions). 6.12. We hold that arguments of Learned AR that, even assuming without conceding, in worst scenario, assessee society could only be taxed in status of AOP does not require any adjudication as we hold that assessee society to be construed as public charitable trust and eligible to claim exemption u/s 11 of Act for earlier assessment years, more especially, Asst Years 2003-04 to 2008-09 , donations received from various donors for construction of old age home would take character of corpus donations as they are meant for specific purposes and accordingly would be exempt u/s 11(1)(d) of Act. Even otherwise, said donation receipts are only capital in nature as it is received for construction of old age home on which fact there is absolutely no dispute. Learned AO also had duly accepted nature of donations, genuinity of donors and its utilization in remand proceedings. Hence in any case, receipt which is by birth, capital in nature, cannot change its character merely for want of registration of society u/s 12AA of Act. It is not case of revenue that donations received are meant for general functioning of charitable objects of society, in which event, donations received thereon would take character of revenue receipts requiring to be credited in income and expenditure account for utilization towards charitable objects thereon. Hence we hold that in any case, donations received by assessee (17 of 28) [ITA-234/2016] society cannot be brought to tax in assessment. 6.13. We hold that since only reason for denial of exemption u/s 11 was absence of registration u/s 12AA (which was granted to assessee society on 29.10.2010 with effect from 1.4.2010) for relevant assessment years and on no other ground, benefit of change in law as above by Finance Act 2014 should be available and for all years, benefit of exemption should be available on date of registration as all assessments were pending as shown above. In this connection, it requires mention specifically that all receipts of donation were proved on enquiry to have been received from claimed donors and utilized for specific purpose (construction of old age home) for which they were received. In conclusion, we hold that insertion of proviso to section 12A(2) of Act has to be construed as retrospective in operation. Respectfully following various judicial precedents relied upon and in facts and circumstances of case, we allow ground nos. 3 to 8 raised by assessee. 2. SNDP Yogam vs. ADIT (Exemption), (2016) 46 CCH 0736, wherein it observed as under:- 7. We have carefully considered rival submissions, perused relevant materials on record and case law on which learned AR had placed strong reliance. primary issue for our consideration is whether CIT(A) is justified in confirming AO's action, for all assessment years under consideration, in assessing entire incomes of assessee from all institutions at maximum marginal rate. In this context, it is appropriate to refer amendment to section 12A(2) of Act and its proviso. For ready reference same is reproduced below: (Section 12A(2) & its proviso) "[(2) Where application has been made on or after 1st day of June, 2007, provisions of sections 11 and 12 shall apply in relation to income of such trust or institution from assessment year immediately following financial year in which such application is made:] [Provided that where registration has been granted to trust or institution under section 12AA, then, provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding aforesaid assessment year, for which assessment proceedings are pending before Assessing Officer as on date of such registration and objects (18 of 28) [ITA-234/2016] and activities of such trust or institution remain same for such preceding assessment year: Provided further that no action under section 147 shall be taken by Assessing Officer in case of such trust or institution for any assessment year preceding aforesaid assessment year only for non-registration of such trust or institution for said assessment year: Provided also that provisions contained in first and second proviso shall not apply in case of any trust or institution which was refused registration or registration granted to it was cancelled at any time under section 12AA.]" 7.1 Further it would be relevant to reproduce explanatory note to provisions of Finance (No.,2) Act 2014 as given in CBDT No. 1/15 dated 21.1.2015 "Para 8.2 Non-application of registration for period prior to year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, power of condonation of delay in seeking registration was not available." first proviso to section 12A(2) was brought in statute only as retrospective effect, with view not to affect genuine charitable trusts and societies carrying on genuine charitable objects in earlier years and substantive conditions stipulated in section 11 to 13 have been duly fulfilled by said trust. benefit of retrospective application alone could be intention of legislature and this point is further strengthened by Explanatory Notes to Finance (No. 2) Act, 2014 issued by Central Board of Direct Taxes vide its Circular No. 01/2015 : dated 21.1.2015. Apparently statute provides that registration once granted in subsequent year, benefit of same has to be applied in earlier assessment years for which assessment proceedings are pending before ld. A.O., unless registration granted earlier is cancelled or refused for specific reasons. statute also goes on to provide that no action u/s. 147 could be taken by AO merely for nonregistration of trust for earlier years. 7.2 When section 12A of Act was amended by introducing new provisos to sub-section (2) of s. 12A by Finance Act, 2014 with effect from 01.10.2014, assessment orders passed by assessing officer in respect of present assessee were pending in appeal before (19 of 28) [ITA-234/2016] first appellate authority. During such pendency, assessee was granted registration u/s. 12AA of Act on 29.07.2013 w.e.f. assessment year 2013-14. Those appeals were continuation of original proceedings and that power of Commissioner of Income-tax was co-terminus with that of assessing officer [ADIT (Exemption) in present case] were two well established principles of law. In view of above and going by principle of purposive interpretation of statues, assessment proceeding which is pending in appeal before appellate authority should be deemed to be 'assessment proceedings pending before assessing officer' within meaning of that term as envisaged under proviso. It follows there-from that assessee which obtained registration u/s. 12AA of Act during pendency of appeal was entitled for exemption claimed u/s. 11of Act. 7.3. explanatory Memorandum to Finance (No. 2) Bill, 2014 which sought to amend section 12A explains objects and reasons for making such amendments. explanation makes it clear that it was in order to provide relief to such trusts in respect of which, due to absence of registration u/s. 12AA tax liability got attached though otherwise they were eligible for exemption by fulfilling other substantive conditions that amendment was brought in. That being so, denying such benefit to trust like assessee who had obtained registration u/s. 12AA during pendency of appeals filed against orders of assessing authority, by narrowly interpreting term, 'pending before assessing officer' so as to exclude its pendency before appellate authority, will be doing violence to provisions of Statute and, as such, liable to be interfered with. Moreover, under Scheme of Act, sections 11 and 12 are substantive provisions which provide for exemptions to religious or charitable trust. Sections 12A and 12AA detail procedural requirements for making application to claim exemptions under sections 11 and 12 by assessee and grant or rejection of such application by commissioner. Thus, in our view, sections 12A and 12AA are only procedural in nature. Hence, it is not registration u/s. 12AA by itself that offers immunity from taxation. receipt whether it is revenue or capital in nature is to be decided at assessment stage. Being procedural in nature, in our view, liberal interpretation will give effect to intention of amendment, thereby removing hardship in genuine cases like present assessee under consideration. 7.4. Taking into account above facts and circumstances of issue, we are of view that AO was not justified in taking stand that registration u/s. 12A was not applicable to assessee for AYs under dispute and condonation petition for delay in filing application for registration u/s. 12A [for AYs under dispute] has not yet been decided by CBDT and, therefore, total incomes of assessee were to be assessed as per commercial (20 of 28) [ITA-234/2016] principles. CIT(A) was also not justified in taking similar stand that of AO, without taking cognizance and intention of amendment to s. 12A of Act. If no judicious or liberal view is not taken either by assessing authority or appellate authority as in case under consideration, very purpose for which such amendment to s. 12A of Act enacted, in our view, would be defeated. We are also supported by order of Kolkata Bench of ITAT in case of Sree Sree Ramkrishna Samity v. DCIT (ITA No. 1680/2012, order dated 09.10.2015) where it was held that amendment to Section 12A w.e.f. 01.10.2014 is retrospective. relevant finding of Hon'ble Kolkata Bench in case of Sree Sree Ramkrishna Samity v. DCIT (supra) read as follows: "6.10. We hold that it is established position in law that proviso which is inserted to remedy unintended consequences and to make provision workable, proviso which supplies obvious omission in section and is required to be read into section to give section reasonable interpretation, requires to be treated as retrospective in operation, so that reasonable interpretation can be given to section as whole and accordingly said insertion of first proviso to section 12A(2) of Act with effect from 1.10.2014 should be read as retrospective in operation with effect from date when condition of eligibility for exemption under section 11 & 12 as mentioned in section 12A provided for registration u/s. 12AA as pre-condition for applicability of section 12A." Further, Kolkata Tribunal observed as under: "6.11. We also hold that though equity and taxation are often strangers, attempts should be made that these do not remain always so and if construction results in equity rather than in injustice, then such construction should be preferred to literal construction. It is only elementary that statutory provision is to be interpreted ut res magis valeat quam pereat, i.e. to make it workable rather than redundant. Applying this legal maxim, it would be just and fair to hold that amendment in section 12A is brought in statute to confer benefit of exemption u/s. 11 of Act on genuine trusts which had not changed its objectives and had carried on same charitable objects in past as well as in current year based on which registration u/s. 12AA is granted by DIT (Exemptions)." 7.5 In light of aforesaid reasoning and order of Tribunal in case of Sree Sree Ramkrishna Samity (supra), we direct Director of Income-tax (Exemption) to grant registration to assessee trust for all assessment years under dispute, subject to following conditions, namely: (21 of 28) [ITA-234/2016] "i) registration U/s. 12AA (1)(b)(i) of Income Tax Act, 1961 does not automatically exempt income of Trust/Institution. question of taxability of income of Trust/Institution shall be examined and decided upon by Assessing Officer at time of assessment based on conduct of activities, compliance with various statutory and other requirements, etc., as referred to in Sections 2(15), 11, 12 & 13 of Income Tax Act, 1961, without prejudice to fact of granting merely in principle registration by DIT(E). ii) With effect from Assessment Year 2009-10, advancement of any object of general public utility other than relief of poor, education and medical relief as defined in section 2(15) of Income Tax Act shall not be charitable purpose, if it involves carrying on of any activity in nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for cess or fee or any other consideration, irrespective of nature of use or application, or retention, of income from such activity. iii) Amendments to Deed/Memorandum, Rules and Regulations, if any, of Trust/Institution shall be made only with prior approval of Commissioner of Income Tax(Exemptions) or any other prescribed authority under Income Tax Act, 1961. iv) registration may be withdrawn on violation of any of stipulations laid down in Income Tax Act, 1961, v) SOCIETY/TRUST shall regularly file its Income Tax Return." 3. Allied Motors (P) Ltd. ETC. vs. Commissioner of Income Tax, (1997) 224 ITR 0677, wherein it has been observed as under:- 8. In case of Goodyear India Ltd. v. State of Haryana and Anr. [1991] 188 ITR 402 (SC) this Court said that rule of reasonable construction must be applied while construing statute. Literal construction should be (22 of 28) [ITA-234/2016] avoided if it defeats manifest object and purpose of Act. Therefore, in well known words of Judge Learned Hand, one cannot make fortress out of dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is surest guide to their meaning. In case of R.B Jodha Mai Kuthiala v. Commissioner of Income-Tax, [1971] 82 ITR 570 (SC) , TC 40R.279, this Court said that one should apply rule of reasonable interpretation. proviso which is inserted to remedy unintended consequences and to make provision workable, proviso which supplies obvious omission in section and is required to be read into section to give section reasonable interpretation, requires to be treated as retrospective in operation so that reasonable interpretation can be given to section as whole. 9. This view has been accepted by number of High Courts. In case of Commissioner of Income-Tax v. Chandulal Venichand [1994] 118 CTR (Guj) 257: (1994) 209 ITR 7(Guj): TC 19R.748, Gujarat High Court has held that first proviso to Section 43B is retrospective and sales-tax for last quarter paid before filing of return for assessment year is deductible. This decision deals with assessment year 1984-85. Calcutta High Court in case of Commissioner of Income-Tax v. Sri Jagannath Steel Corporation [1991]191ITR676(Cal) , has taken similar view holding that statutory liability for sales-tax actually discharged after expiry of accounting year in compliance with relevant statute is entitled to deduction under Section 43B. High Court has held amendment to be clarificatory and, therefore, retrospective. Gujarat High Court in above case held amendment to be curative and explanatory and hence retrospective. Patna High Court has also held amendment inserting First proviso to be explanatory in case of Jamshedpur Motor Accessories Stores v. Union of India and Ors. [1991]189ITR70(Patna) . It has held amendment inserting first proviso to be retrospective. special leave petition from this decision of Patna High Court was dismissed. view of Delhi High Court, therefore that first proviso to Section 43B will be available only prospectively does not appear to be correct. As observed by G.P. Singh in his Principles of Statutory Interpretation, 4th Edn. Page 291, "It is well settled that if statute is curative or merely declaratory of previous law retrospective operation is generally intended." In fact amendment would not serve its object in such situation unless it is construed as retrospective. view, therefore, taken by Delhi High Court cannot be sustained. (23 of 28) [ITA-234/2016] 10. In premises appeals are allowed and Income-tax references are answered in favour of assessees and against revenue. In circumstances, however, there will be no order as to costs. 4. St. Jude s Convent School vs. Assistent Commissioner of Incoem-tax, [2017] 77 taxmann.com 173 (Amritsar Trib.), wherein it has been observed as under:- 12. In response to this, ld. Counsel for assessee has contended that assessment proceedings pending in appeal are deemed to be assessment proceedings pending before Assessing Officer. For this proposition, ld. Counsel has placed reliance on decisions in cases of SNDP Yogam v. Asstt. DIT (Exemption) [2016] 161 ITD 1/68 taxmarm.com 152 (Coch. - Trib.) and Shree Bhanushali Mitra Mandal Trust v. ITO [2016] 68 taxmann.com 250 (Ahd. Trib.). 13. ld. DR has further submitted that in any case, said first proviso has been inserted by Finance (No. 2) Act, 2014 w.e.f. 01-4-2014 and as such, it is not applicable retrospectively. 14. For this, ld. Counsel for assessee has, again, cited decision in case of SNDP Yogam (supra). 15. We have heard rival contentions of both parties with reference to merits of additional ground. relevant portion of Section 12A of Act is as follows:- "Section 12A - (1) Conditions as to registration of trusts, etc.- provisions of section 11 and section 12 shall not apply in relation to income of any trust or institution unless following conditions are fulfilled, namely :- (aa) person in receipt of income has made application for registration of trust or institution on or after 1st day of June, 2007 in prescribed form and manner to Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; (24 of 28) [ITA-234/2016] (2) Where application has been made on or after 1st day of June, 2007, provisions of sections 11 and 12 shall apply in relation to income of such trust or institution from assessment year immediately following financial year in which such application is made: Provided that where registration has been granted to trust or institution under section 12AA, then, provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding aforesaid assessment year, for which assessment proceedings are pending before Assessing Officer as on date of such registration and objects and activities of such trust or institution remain same for such preceding assessment year. Provided further that no action under section 147 shall be taken by Assessing Officer in case of such trust or institution for any assessment year preceding aforesaid assessment year only for non-registration of such trust or institution for said assessment year". 16. Thus, as per provisions of Section 12A, if Trust or Institution has applied for registration on or after 01- 6-2007 and such registration has been granted to it provisions of Sections 11 and 12 shall not apply to its income. If application for registration has been made on or after 01-6-2007, provisions of Sections 11 and 12 shall apply for any assessment year preceding assessment year immediately following financial year in which application for registration was made, for which year, assessment proceedings are pending before Assessing Officer as on date of registration and objects and activities of Trust or Institution remained same as those on basis of which registration was granted, According to second proviso to Section 12A(2), where for assessment year immediately following financial year. In which application for registration was made, Trust or Institution is not registered, no action u/s. 147 shall be taken for any assessment year preceding said assessment year. 17. first issue before us is as to whether two provisos to Section 12A(2) are applicable to all appeals before us, respectively, as contended by ld. Counsel for assessee, or whether, since provisos have been brought in w.e.f. 01-10-2014 and they have not been made applicable, retrospectively, same are not applicable for earlier periods, as submitted by department. 18. Now, bare reading of first proviso to Section 12A(2) shows that it has not been made applicable (25 of 28) [ITA-234/2016] retrospectively. It has been inserted in Act w.e.f. 01- 10-2014, by virtue of Finance (No. 2) Act, 2014. Thus, ordinarily, it ought to be taken as applicable only prospectively, and not retrospectively. However, law is well settled to effect that if proviso brought in as procedural or beneficial one, intending to remove hardship, it is applicable retrospectively. 19. In C.B. Richards Ellis Mauritius Ltd. v. Asstt. DIT [2012] 208 Taxman 322/21 taxmann.com 535 (Delhi) (copy on record), it has been held that "procedural law, when amended" or substituted, is generally retrospective and applies from date of its enforcement and to this extent, it can be retrospective". 20. In Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677/91 Taxman 205 (SC), it has been held that proviso, which is intended to intended to remedy unintended consequences and to make provision workable, proviso which supplies obvious omission in section and is required to be read into section to give section reasonable interpretation, is required to be treated as retrospective in operation, so that reasonable interpretation can be given to section as whole. It is, thus, trite that if provision is curative or merely declaratory of previous law, retrospective operation thereof is generally intended. 21. In CIT (Central) v. Vatika Township (P.) Ltd. [2014] 367 ITR 466/227 Taxman 121/49 taxmann.com 249 (SC), Constitutional Bench of Hon'ble Supreme Court held that "if legislation confers benefit on some persons but without inflicting corresponding detriment on some other person or on public generally, and where to confer such benefit appears to have been legislators' object, then presumption would be that such legislation, giving it purposive construction, would warrant it to be given retrospective effect." 22. In Government of India v. Indian Tobacco Association [2005] 7 SCC 396, doctrine of fairness was held to be relevant factor to construe statute conferring benefit, in context of it to be given retrospective operation. 23. In Vijay v. State of Maharashtra [2006] 6 SCC 286, Hon'ble Supreme Court went to extent of holding that "where law is enacted for benefit of community as whole, even in absence of provision, statute may be held to be retrospective in nature." 24. Now, undeniably, assessment of Income is matter of procedure. Even heading of Chapter (xiv) of Act, which deals with assessment itself is "PROCEDURE FOR ASSESSMENT". Likewise, grant of registration is also procedural aspect since registration (26 of 28) [ITA-234/2016] is but step-in- aid for exemption u/s. 11. As such, provisos to Section 12A(2) are also procedural. 25. So far as regards bringing in of first proviso to Section 12A(2), Memorandum explaining provisions of Finance (No. 2) Bill, 365 ITR (Statute) 175 itself elaborates intention of Legislature behind insertion thereof in statute book. It states, inter alia, that non-application of registration for period prior to year of registration causes genuine hardship to charitable organizations. Due to absence of registration, tax liability gets attached even though they may otherwise be eligible for exemption and fulfil other substantive conditions. power of condonation of delay is not available under section. In order to provide relief to such Trusts and remove hardship in genuine cases, it is proposed to amend Section 12A of Act to provide that in case where Trust or Institution has been granted registration u/s. 12AA of Act, benefit of Sections 11 and 12 shall be available in respect of any income derived from property held under Trust in any assessment proceedings for any earlier assessment year, which is pending before Assessing Officer as on date of such registration, if objects and activities of such Trust or Institution in relevant earlier assessment year are same as those on basis of which such registration has been granted. 26. Thus, clearly, provisions of Section 12A of Act entailed unintended consequences of non-application of registration for period prior to year of registration and, thereby, non-grant of exemption u/ss. 11 and 12 up to grant of registration. This position was also recognized by CBDT while issuing Explanatory Notes to provisions of Finance (No. 2) Act, 2014, vide CBDT circular No. 1 of 2015 : dated 21/1/2015. It was this anomaly, which was cured by bringing in first proviso to Section 12A(2), This proviso, even as avowed by above quoted Memorandum explaining provisions of Finance (No. 2) Bill, has sought to remedy said unintended hardship visiting Trusts and Institutions. It has supplied aforesaid omission in section and has thereby made provision of section workable, providing reasonable interpretation to it by providing benefit mandated by it. It is, thus, curative proviso, which is but merely declaratory of previous law. It has, by removal of hardship, rendered procedure more relief-oriented. It adequately complies with natural justice principle of fairness to all. Hence, it has to be presumed and construed as retrospective in nature, in order to give section purposive interpretation. 27. In Sree Sree Ramkrishna Samity v. Dy. CIT [2016] 156 ITD 646 : [2015] 64 taxmann.com 330 (Kol.), (27 of 28) [ITA-234/2016] above position has elaborately been considered to hold first proviso to Section 12A(2) to be retrospectively applicable. said decision has been followed in SNDP Yogam (supra). 28. In view of above discussion and respectfully following these decisions, in absence of any decision to contrary having been cited before us by department, we hold that first proviso to section 12A(2) of Act is applicable retrospectively. 29. Likewise, for same reasoning, it is also held, regarding second batch of appeals, that even second proviso to Section 12A(2) is retrospective in nature and completed assessments in these cases ought not to have been reopened only for non-registration for relevant assessment years. 30. This brings us to next question, i.e., whether assessment proceeding "pending before Assessing Officer", as stated in first proviso to Section 12A(2) can be taken as "pending in appeal", or, in other words, whether proceedings pending in appeal can be taken to be proceedings pending before Assessing Officer. This issue also stands answered in favour of assessee by Shree Bhanushali Mitra Mandal Trust (supra), wherein, it was held that appeal is continuation of original proceedings and assessment proceedings pending before appellate authority should be deemed to be "assessment proceedings pending before Assessing Officer" within meaning of Section 12A. SNDP Yogam {supra), is to same effect. Again, no contrary decision has been brought to our notice. Accordingly, it is held that appellate proceedings before appellate authorities are deemed to be assessment proceedings pending before Assessing Officer. 31. In all these cases, impugned orders were passed after respective dates of grant of registration. Thus, we hold that subsequent grant of registration in all these cases operates retrospectively for all relevant years under consideration. 5. CBDT Circular No. 1/2015, dated 21.1.2015, reads as under:- 8.1 provisions of section 12A of Income-tax Act, before amendment by Act, provided that trust or institution can claim exemption under sections 11 and 12 only after registration under section 12AA of said Act (28 of 28) [ITA-234/2016] has been granted. In case of trusts or institutions which apply for registration after 1st June, 2007, registration shall be effective only prospectively. 8.2 Non-application of registration for period prior to year of registration caused genuine hardship to charitable organisations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfil other substantive conditions. However, power of condonation of delay in seeking registration was not available. 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of Income-tax Act has been amended to provide that in case where trust or institution has been granted registration under section 12AA of Income-tax Act, benefit of sections 11 and 12 of said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for earlier assessment year which is pending before Assessing Officer as on date of such registration, if objects and activities of such trust or institution in relevant earlier assessment year are same as those on basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of assessment under section 147 of Income-tax Act shall be taken by Assessing Officer in case of such trust or institution for any assessment year preceding first assessment year for which registration applies, merely for reason that such trust or institution has not obtained registration under section 12AA for said assessment year. 8.5 However, above benefits would not be available in case of any trust or institution which at any time had applied for registration and same was refused under section 12AA of Income-tax Act or registration once granted was cancelled. 5. Issue is required to be answered in favour of assessee. 6. appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Chouhan/35 Commissioner of Income-tax ( Exemptions), Jaipur v. Shree Shyam Mandir Committee